Uncertainty surrounds timeline for balanced Alberta budget

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CALGARY — The Tory timeline to return Alberta to budget surplus was mired in confusion Monday as the government grapples with a financial squeeze.

A morning email to PC party members from Premier Alison Redford saying the government was working toward a balanced budget in 2014 — contrary to an oft-repeated promise to balance the books next year — was later described by the premier’s office as mistaken in its date.

But the government continues to stress only that there will be an operating surplus next year — not an overall surplus — even as it prepares to borrow money to fund capital projects for much-needed infrastructure.

Mount Royal University political scientist Duane Bratt said the government has been trying to lay the groundwork for months for a redefinition of a balanced budget — and Redford’s financial pledge.

“But to be able to do that, you’re changing the accounting of what has been said for years,” he said. “I don’t think this is going to fly. I don’t think people are going to accept the argument.”

In her run for the Tory leadership last year and during the spring election campaign, Redford pledged the government would once again have balanced books in 2013 after a string of deficits dating back to 2008.

In a Monday message sent to Progressive Conservative party supporters, Redford writes of continued pressure to spend on needed infrastructure at the same time the province takes a hit on revenues — including from lower natural gas prices.

“We have a balanced operational budget but have a shortfall when it comes to capital spending. We could easily balance that part ... as well if we cancelled all capital projects such as critically needed hospitals and road(s) or the many needed new schools.” she wrote.

“We have chosen to bear the criticism of having an unbalanced budget rather than abandon those needed projects. At the same time, however, we are limiting spending in other areas and are working towards a balanced budget by the spring of 2014.”

The Tory government projected an $886-million deficit in this year’s budget, but lower-than-expected oil and gas prices have caused the shortfall to balloon to $3 billion. Its current financial plan projects a $952-million surplus in the budget year starting next April.

Since the PC party convention last month, Redford has been suggesting the province will borrow and use other alternative finance measures such as P3s (public-private partnerships) to fund major capital projects.

Neither the premier nor Finance Minister Doug Horner was available for comment Monday.

In an email sent Monday afternoon, Redford spokesman Jay O’Neill said the premier’s note had “the wrong date” and should have read spring 2013.

“That being said, the premier has said repeatedly the province will have a balanced operational budget, a fully funded capital plan and a savings plan. She has said that we will continue to fund those services and build the necessary infrastructure Albertans expect as we deal with this unprecedented growth,” O’Neill said.

Wildrose Leader Danielle Smith said Monday’s confusion is “symptomatic” of the government’s mixed messages on what is happening with the province’s finances.

“They can’t get their message straight,” Smith said.

The Opposition leader said Albertans won’t know until the budget is presented next February what it will look like.

“No one has any idea where this premier is taking the province because she promises one thing before the election, and then she changes her talking points and she changes her position after the election,” Smith said.

NDP Leader Brian Mason said a 2013 deficit would be a broken promise by Redford.

The public would be more forgiving if the premier didn’t have other broken pledges and a rash of major spending commitments still to come that are left over from the spring campaign, he said.

The government consistently runs an operating surplus when capital spending is taken out of the equation. In this year’s budget, the government estimated $40.2 billion in revenue and $36.5 billion in operating expenses.

Capital grants were slated at $3.5 billion, while capital amortization is projected at $882 million.

Robyn Cochrane, press secretary to Finance Minister Doug Horner, said the 2013-14 budget is still in the works and she could not comment on next year’s surplus or deficit figures.

However, the budget will look different than in the past because of the borrowing for capital, she said.

It is possible the government will increase debt through borrowing without having an annual deficit, Cochrane acknowledged.

Scott Hennig of the Canadian Taxpayers Federation said the government has been “softening us up for a change in the definition of a balanced budget,” but is making a false argument.

“Capital is the easiest one to sell. They can pull anything out of the budget and say it’s balanced ... if they pull health care out of the budget we have a massive surplus,” he said.

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